Question 1

What is an internal rate of return and what advantages and disadvantages are accrued by using it to evaluate projects?

Accepted Answer

Internal rate of return (IRR) is a metho

Question 2

A project manager is using a simple scoring model to decide which of four projects is best, given the company's limited resources. The criteria, importance weights, and scores for each are shown in the table. Which project should be chosen?

Accepted Answer

A)  Project White 
B)  Project Pinkman 
C)  Project Fring 
D)  Project Salamanca 
A)  Project White 
B)  Project Pinkman 
C)  Project Fring 
D)  Project Salamanca

Question 3

Regardless of which selection method a firm uses, it should always:

Accepted Answer

A)  Be able to predict how much revenue will be returned to the firm each year. 
B)  Know which project will ultimately succeed and which ones will fail. 
C)  Be objective in their selection method. 
D)  Use a weighted scoring technique. 
A)  Be able to predict how much revenue will be returned to the firm each year. 
B)  Know which project will ultimately succeed and which ones will fail. 
C)  Be objective in their selection method. 
D)  Use a weighted scoring technique.

Question 4

A firm is BEST served if its project portfolio:

Accepted Answer

A)  Has a number of low-cost experimental prototypes. 
B)  Devotes significant resources to hit product "home runs." 
C)  Aims to take the marketplace by storm regardless of future trends. 
D)  Represents narrowly concentrated efforts. 
A)  Has a number of low-cost experimental prototypes. 
B)  Devotes significant resources to hit product "home runs." 
C)  Aims to take the marketplace by storm regardless of future trends. 
D)  Represents narrowly concentrated efforts.

Question 5

A project manager is using the internal rate of return method to make the final decision on which project to undertake. Which of these four projects has the highest internal rate of return?

Accepted Answer

A)  $25,000 initial outlay with $10,000 cash inflows during the following five years 
B)  $12,500 initial outlay with $10,000 cash inflows during the following five years 
C)  $25,000 initial outlay with $5,000 cash inflows during the following five years 
D)  $12,500 initial outlay with $5,000 cash inflows during the following five years 
A)  $25,000 initial outlay with $10,000 cash inflows during the following five years 
B)  $12,500 initial outlay with $10,000 cash inflows during the following five years 
C)  $25,000 initial outlay with $5,000 cash inflows during the following five years 
D)  $12,500 initial outlay with $5,000 cash inflows during the following five years

Question 6

The most important thing to remember when using project selection models is to be consistent and objective.

Accepted Answer

A) True 
 B)False

Question 7

The reciprocal of the payback period is used to calculate the average rate of return for a project.

Accepted Answer

A) True 
 B)False

Question 8

Personnel costs comprise one of the highest sources of project expense.

Accepted Answer

A) True 
 B)False

Question 9

A project with the chance for a big payout may be funded if an important criterion is:

Accepted Answer

A)  Cost. 
B)  Opportunity. 
C)  Top management pressure. 
D)  Risk. 
A)  Cost. 
B)  Opportunity. 
C)  Top management pressure. 
D)  Risk.

Question 10

Because projects managed under a project portfolio management scheme may be independent of each other, it is not necessary to consider resource use when deciding to pursue any single project.

Accepted Answer

A) True 
 B)False

Question 11

Which statement about the Analytical Hierarchy Process is FALSE?

Accepted Answer

A)  AHP scores are significant. 
B)  AHP can be used to capture choice options that do not yield positive outcomes. 
C)  AHP can improve the process of developing project proposals. 
D)  AHP groups subcriteria that share the weight of a common higher-level criterion. 
A)  AHP scores are significant. 
B)  AHP can be used to capture choice options that do not yield positive outcomes. 
C)  AHP can improve the process of developing project proposals. 
D)  AHP groups subcriteria that share the weight of a common higher-level criterion.

Question 12

A project manager is using the payback method to make the final decision on which project to undertake. The company has a 10% required rate of return and expects a 4% rate of inflation for the following five years. What is the non-discounted payback of a project that has cash flows as shown in the table?

Accepted Answer

A)  3.7 years 
B)  4.1 years 
C)  5.0 years 
D)  4.8 years 
A)  3.7 years 
B)  4.1 years 
C)  5.0 years 
D)  4.8 years

Question 13

Every decision model contains both objective and subjective factors.

Accepted Answer

A) True 
 B)False

Question 14

A project manager is using the internal rate of return method to make the final decision on which project to undertake. Which of these four projects has the highest internal rate of return?

Accepted Answer

A)  $100,000 initial outlay with $10,000 cash inflows during the first two years, $20,000 during the third and fourth years, and $30,000 during the fifth year 
B)  $100,000 initial outlay with a $5,000 cash inflow during the first year, $15,000 cash inflow during the second year, and $25,000 cash inflows during years three through five 
C)  $75,000 initial outlay with a $5,000 cash inflow during the first year, increasing by $5,000 per year through the fifth year 
D)  $50,000 initial outlay with $5,000 cash inflows during the first two years, $15,000 during the third and fourth years, and $20,000 during the fifth year 
A)  $100,000 initial outlay with $10,000 cash inflows during the first two years, $20,000 during the third and fourth years, and $30,000 during the fifth year 
B)  $100,000 initial outlay with a $5,000 cash inflow during the first year, $15,000 cash inflow during the second year, and $25,000 cash inflows during years three through five 
C)  $75,000 initial outlay with a $5,000 cash inflow during the first year, increasing by $5,000 per year through the fifth year 
D)  $50,000 initial outlay with $5,000 cash inflows during the first two years, $15,000 during the third and fourth years, and $20,000 during the fifth year

Question 15

If a model can be applied successfully by people in all areas and levels of an organization, it is said to possess the trait of:

Accepted Answer

A)  Capability. 
B)  Ease of use. 
C)  Flexibility. 
D)  Realism. 
A)  Capability. 
B)  Ease of use. 
C)  Flexibility. 
D)  Realism.

Question 16

The Analytic Hierarchy Process is being employed in a project selection decision. One major criteria, cost, receives a weighting value of 40%, which is split into short term (50%), intermediate term (30%), and long term (20%). Which of these statements is BEST?

Accepted Answer

A)  Short term, intermediate term, and long term must receive overall weightings that total 100%. 
B)  There must be at least one other major criteria that has 40% weighting. 
C)  Intermediate-term cost receives a weighting of 12%. 
D)  Long-term cost receives an overall weighting of 80%. 
A)  Short term, intermediate term, and long term must receive overall weightings that total 100%. 
B)  There must be at least one other major criteria that has 40% weighting. 
C)  Intermediate-term cost receives a weighting of 12%. 
D)  Long-term cost receives an overall weighting of 80%.

Question 17

What is project portfolio management and what are its objectives and initiatives?

Accepted Answer

Project portfolio management is the syst

Question 18

If an organization that currently is managing a vast and well-balanced portfolio of projects decides on a new strategic direction, it will initially face the problem of:

Accepted Answer

A)  Scarce resources. 
B)  A conservative technical community. 
C)  Out-of-sync projects and portfolios. 
D)  Unpromising projects. 
A)  Scarce resources. 
B)  A conservative technical community. 
C)  Out-of-sync projects and portfolios. 
D)  Unpromising projects.

Question 19

The efficient frontier in a profile model is the set of options that offers a maximum return for a given level of risk or a minimum risk for every level of return.

Accepted Answer

A) True 
 B)False

Question 20

What are options models and when should they be used to evaluate projects? Provide an example.

Accepted Answer

Options models open financial analysis t

What is an internal rate of return and what advantages and disadvantages are accrued by using it to evaluate projects?

A project manager is using a simple scoring model to decide which of four projects is best, given the company's limited resources. The criteria, importance weights, and scores for each are shown in the table. Which project should be chosen?

Regardless of which selection method a firm uses, it should always:

A firm is BEST served if its project portfolio:

A project manager is using the internal rate of return method to make the final decision on which project to undertake. Which of these four projects has the highest internal rate of return?

The most important thing to remember when using project selection models is to be consistent and objective.

The reciprocal of the payback period is used to calculate the average rate of return for a project.

Personnel costs comprise one of the highest sources of project expense.

A project with the chance for a big payout may be funded if an important criterion is:

Because projects managed under a project portfolio management scheme may be independent of each other, it is not necessary to consider resource use when deciding to pursue any single project.

Which statement about the Analytical Hierarchy Process is FALSE?

Every decision model contains both objective and subjective factors.

A project manager is using the internal rate of return method to make the final decision on which project to undertake. Which of these four projects has the highest internal rate of return?

If a model can be applied successfully by people in all areas and levels of an organization, it is said to possess the trait of:

The Analytic Hierarchy Process is being employed in a project selection decision. One major criteria, cost, receives a weighting value of 40%, which is split into short term (50%), intermediate term (30%), and long term (20%). Which of these statements is BEST?

What is project portfolio management and what are its objectives and initiatives?

If an organization that currently is managing a vast and well-balanced portfolio of projects decides on a new strategic direction, it will initially face the problem of:

The efficient frontier in a profile model is the set of options that offers a maximum return for a given level of risk or a minimum risk for every level of return.

What are options models and when should they be used to evaluate projects? Provide an example.

Introduction: Why Project Management

The Organizational Context: Strategy, Structure, and Culture

Leadership and the Project Manager

Scope Management

Project Team Building, Conflict, and Negotiation

Risk Management

Cost Estimation and Budgeting

Project Scheduling: Networks, Duration Estimation, and Critical Path

Project Scheduling: Lagging, Crashing, and Activity Networks

Advanced Topics in Planning and Scheduling: Agile and Critical Chain

Resource Management

Project Evaluation and Control

Project Closeout and Termination

Filters

Exam 3: Project Selection and Portfolio Management

What is an internal rate of return and what advantages and disadvantages are accrued by using it to evaluate projects?

A project manager is using a simple scoring model to decide which of four projects is best, given the company's limited resources. The criteria, importance weights, and scores for each are shown in the table. Which project should be chosen?

Regardless of which selection method a firm uses, it should always:

A firm is BEST served if its project portfolio:

A project manager is using the internal rate of return method to make the final decision on which project to undertake. Which of these four projects has the highest internal rate of return?

The most important thing to remember when using project selection models is to be consistent and objective.

The reciprocal of the payback period is used to calculate the average rate of return for a project.

Personnel costs comprise one of the highest sources of project expense.

A project with the chance for a big payout may be funded if an important criterion is:

Because projects managed under a project portfolio management scheme may be independent of each other, it is not necessary to consider resource use when deciding to pursue any single project.

Which statement about the Analytical Hierarchy Process is FALSE?

Every decision model contains both objective and subjective factors.

A project manager is using the internal rate of return method to make the final decision on which project to undertake. Which of these four projects has the highest internal rate of return?

If a model can be applied successfully by people in all areas and levels of an organization, it is said to possess the trait of:

The Analytic Hierarchy Process is being employed in a project selection decision. One major criteria, cost, receives a weighting value of 40%, which is split into short term (50%), intermediate term (30%), and long term (20%). Which of these statements is BEST?

What is project portfolio management and what are its objectives and initiatives?

If an organization that currently is managing a vast and well-balanced portfolio of projects decides on a new strategic direction, it will initially face the problem of:

The efficient frontier in a profile model is the set of options that offers a maximum return for a given level of risk or a minimum risk for every level of return.

What are options models and when should they be used to evaluate projects? Provide an example.

Introduction: Why Project Management

The Organizational Context: Strategy, Structure, and Culture

Leadership and the Project Manager

Scope Management

Project Team Building, Conflict, and Negotiation

Risk Management

Cost Estimation and Budgeting

Project Scheduling: Networks, Duration Estimation, and Critical Path

Project Scheduling: Lagging, Crashing, and Activity Networks

Advanced Topics in Planning and Scheduling: Agile and Critical Chain

Resource Management

Project Evaluation and Control

Project Closeout and Termination

Filters